In today’s world, getting a quality education often comes with a price tag. And for many students, a student loan becomes a trusted partner on this academic journey. However, before you apply for a student loan, there’s one important thing to understand: student loan interest rates. They may sound complicated at first, but don’t worry. In this guide, we will break it down in simple words, just like how you would explain it to a friend.
Let’s dive in and decode everything about student loan interest, how it works, and how you can make smart decisions while applying.
What Is Student Loan Interest?
Student loan interest acts as an extra money you pay the bank or lender when you borrow money for your further studies. Just like a rental fee, the bank charges a certain percentage on the loan amount. This percentage is what we call the interest rate.
So, if you borrow ₹10 lakhs with an interest rate of 10%, you’ll be paying back more than ₹10 lakhs over time, the extra is the interest.
How Do Student Loan Interest Rates Work?
Student loan rates are usually calculated as a percentage of the total amount borrowed. Most Indian banks and NBFCs offer education loans with interest rates ranging from 8% to 15%, depending on various factors.
Let’s understand this better:
- Fixed Interest Rate: The rate stays the same for the entire loan period.
- Floating Interest Rate: The rate can increase or decrease based on the RBI’s repo rate and other factors.
Before choosing a loan, always ask whether it’s fixed or floating.
Factors That Affect Education Loan Interest Rates
There’s no one-size-fits-all when it comes to education loan interest rates. Here are a few things that can impact the rate you are offered:
- Type of Course and Institute: Loans for premier institutes like IITs, IIMs, or foreign universities may come at better rates.
- Collateral: Secured loans (with property or FD as security) usually have lower interest rates.
- Credit Score of Co-applicant: If your parent or guardian has a good credit score, chances of getting student loans with low interest rates improve.
- Loan Amount and Tenure: Bigger loan amounts or longer repayment periods may attract higher rates.
What Is a Student Loan Interest Calculator?
Ever wondered how much extra you will pay as interest? That’s where a student loan interest calculator helps. It’s an online tool where you enter your loan amount, interest rate, and tenure, and it gives you a breakup of your monthly EMI and total interest.
These calculators are super handy and are usually available on bank websites and loan aggregator platforms. Try it out before finalising your loan, it helps you plan better.
Is It Possible to Get Student Loans Without Interest?
Now, many students ask – “Are there student loans without interest?”
Well, in most cases, all loans come with some form of interest. However, the Indian government and some state governments offer subsidy schemes where the interest is covered for a certain period.
For example:
- Central Sector Interest Subsidy Scheme (CSIS): This scheme is for students from economically weaker sections. If eligible, the government pays the interest during the moratorium period (course duration + 1 year).
- State-level schemes: Some states like Bihar, Tamil Nadu, and Kerala have their own subsidy or education loan no interest programs.
So technically, yes for some students, it is possible to get a student loan with no interest for a limited time.
Read More: Education Loan EMI Calculator | Student Loan EMI & Eligibility
Education Loan Rates of Top Indian Banks (As of 2025)
Here’s a quick look at education loan rates offered by some major banks:
| Bank | Education Loan Interest Rate |
| SBI | 8.55% to 10.05% |
| HDFC Credila | 9.25% onwards |
| Axis Bank | 13.70% onwards |
| ICICI Bank | 10.50% to 12.75% |
| Bank of Baroda | 8.40% to 10.90% |
Note: These rates are indicative and can change. Always check the latest details before applying.
How to Get Student Loans with Low Interest Rates?
Getting student loans with low interest rates is not impossible. You just need to be smart and proactive. Here are a few tips:
- Compare Different Lenders: Don’t just go to one bank. Use online comparison tools to find the best deal.
- Apply with a Co-applicant: A parent or guardian with good financial standing can help lower your rate.
- Consider Secured Loans: If you can provide collateral, lenders may offer better terms.
- Apply Early: Don’t wait till the last moment. Planning ahead gives you time to negotiate and choose wisely.
- Explore Government Schemes: Always check if you’re eligible for interest subsidies or zero-interest loan schemes.
When Does Student Loan Interest Start?
Usually, student loan interest starts getting calculated from the day the loan amount is disbursed. But repayment doesn’t begin immediately.
Most loans come with a moratorium period – this is the course duration plus 6–12 months. During this time, you may choose to:
- Pay simple interest only (to reduce the burden later), or
- Pay nothing (interest gets added to the loan).
But remember, the longer you delay, the more interest gets added. If possible, start paying early – even small EMIs can save a lot in the long run.
Final Thoughts
Taking an education loan is a big step, and understanding how student loan interest rates work is super important. It’s not just about how much you borrow, but how much you end up paying back.
Use tools like the student loan interest calculator, compare education loan interest from different banks, and try your best to go for student loans with low interest rates. If you are lucky, you might even qualify for student loans without interest under some government scheme.
And always remember, education is an investment. With the right planning, you can study stress-free and repay confidently.
FAQs
Q1: Are there any banks in India that offer student loan no interest?
A: Not exactly, but government subsidies can make it interest-free during the moratorium period.
Q2: Which is the best bank for low student loan interest rates?
A: Public sector banks like SBI and Bank of Baroda generally offer better rates than private lenders.
Q3: Is it better to go for a fixed or floating education loan interest rate?
A: If you want stable EMIs, go for fixed. If you can take some risk and want to benefit from rate drops, choose floating.
Q4: Can I switch to another lender if my student loan interest becomes too high?
A: Yes, it’s called loan refinancing or balance transfer. But read the fine print before switching.
